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If Health Care Is a Business Then Who Are the Customers?
Much of the objection to health care reform comes from people with a strong belief in the free enterprise system, lovers of capitalism, and advocates for the belief that all problems can be solved by using a business model. When applying concepts of business to health care (and let there be no doubt about this, health care is a business) it is important to figure out who is the buyer and who is the seller. If you are confused about who the customer is, you will be misled by the data you gather.
So who is the real customer in the health care business? Most of us would assume that the customer is the person in need of health care. The doctor is the service provider and the sick person is the customer, right, or maybe not? The assumption might be wrong.
What I believe is that there are categories or layers of customers and service providers within most of our health care transactions. The primary customer is the one that must be clarified to understand the goals and motives all participating parties.
Let us look first at the doctor patient relationship. I suggest that the most important customer (the primary customer) in the doctor’s office is not the sick person. The way to find the primary customer is to follow the same advice Deep Throat gave to Woodward and Bernstein in that movie All The President’s Men, we must “follow the money.” The person paying is the customer.
Now it is true that the patient does pay the doctor something, but for insured patients they are only paying co-pays. Yeah, I know, for most of us struggling from pay check to pay check there is nothing ONLY about our co-pays. Co-pays may be a strain on your personal budget, and the burden of deductibles and co-pays may be significant to you and me, but what the patient pays pales in comparison to what is being paid by the insurance companies. The one that pays the most is the primary customer. The true customer in the doctor’s office is actually the health insurance provider not the sick guy.
If sick people were the true customer then the service provider (doctors, nurses, X-ray technicians, phlebotomists, pharmacists, and all health care industry employees) would be trying to please the sick people while also attempting to squeeze as much additional money as they can from them. Please understand that I am not denigrating the medical profession. Obviously we have thousands of health care providers that care deeply about their patients, but remember; health care is still a business. If the doctor’s don’t get paid, the vast majority of them will go on to use their considerable talents somewhere else. In a crisis most of us will render aid to the injured folk we encounter, but very few of us will render aid full time without being paid for our efforts. We certainly won’t invest hundreds of thousands of dollars in medical schools just so we can use our education and skills to help others for free. For the health care business to work the doctors have to get paid and the customer paying the most money to them is not patient’s it is the health insurance providers.
Yes, I know, there are saints and altruistic people around, but they are rare. The element astatine-210, exists, but it is still the rarest element on earth. Maybe saints exist, but as far as I can tell, astatine-210 is more common that altruistic sainthood. What I mean is that while selfless, unconditional love and service with no expectation of return exists, but they are rare. Yes, there are doctors that go to Harvard Medical School and then practice in 3rd World Countries earning a tiny fraction of what they could have made in New York City but these wonderful people do not represent the majority of people in health care professions. When I think of selfless role models I think of Jesus, Mother Teresa, and maybe Gandhi. If I had a nickel for every selfless saint I’d ever met in person, well, I wouldn’t have a single nickel.
I am not against health care workers from making high incomes. The good done by these professionals is worth a high income. We want to pay doctors a lot because we want the best and brightest practicing medicine. I do believe that many and perhaps most of our health care workers care about people and want to save lives, and enhance the quality of life for all their patients.
I am sure that some health care providers could make more money doing something else. If money was the only motive then doctors would look at earning surveys and would practice only the specialties that bring in the most dollars, We have doctors slaving away at treating rare diseases and earning far less than a Hollywood Plastic Surgeon, but they work for less because they are paid in other ways, not in dollars, but perhaps by the feeling they get from contributing to humanity in meaningful ways. But even those who will work for less in order to serve the ill and injured still will not work for nothing. There is a big difference in working for less and working for nothing. Remember, capitalism is a system that functions by relying on basic human selfishness. We do what we get paid for doing, and without pay we find something else to do that will bring in money. It is possible to work for money and still be a caring sensitive human being, but, without the money, well, we will be caring and sensitive doing something else.
if the health care service providers do what they do for pay, then their primary customer has to be the one paying the lion’s share for their services. For most of us, who is paying the doctors? It is the health insurance companies. Sick people pay something but it is so much less than what is being paid by the insurance industry that we, the sick, become secondary customers.
Capitalism is a selfish system. This means that most business will provide a service or product for money and they will seek a balance trying to maximize their income while providing as little as possible to win that dollar amount. Some may provide premier products and services, but only when the market, the customer, wants that elite product, or extraordinary service and are willing to pay more to get it. The DeLorean thought his DMC-12 stainless steel sports car would be so special, so elite, and such a status symbol that it would be in high demand by rick people and he would be rewarded with great wealth. When the DeLorean didn’t sell the product was discontinued.
sometimes you provide a lot, and sometimes you provide just enough, depending upon your business plan. In health care the doctors want to provide the sorts of services that will please the customer while encouraging the customer to pay out as much as possible for add-on services and procedures. In other words, doctors are not always seeking to please the insurance companies; they are also trying to run the bills up. Have you ever gone to a car repair place to get the oil changed and learned that you need a new air filter, new tires, a front end alignment, a radiator flush, and a new drip pan cover? The way a business makes money is to add on as many charges as possible, and squeeze that oil change into something a lot bigger than pocket change. In the same way some doctors will order tests, and procedures in order to squeeze extra dollars from their primary customer, the insurance company.
Health Insurance Providers
In the free enterprise system, if a business is going to succeed, it must attract and retain customers providing just enough product or serve to extract the maximum amount of money possible from the customer. The health insurance company has issues to juggle. The goal of the insurance company is to make money, so while we may have assumed that the customer to the health insurance company would be the policy holder, the actual customer is actually the stock holders. The goal of the for-profit health insurance company is to achieve a very health bottom-line. If you are an insurance company and if you want to earn the most money possible for your stock holders then you must denying coverage while trying to retain as many policy holders as possible. There is a risk in denying coverage (lawsuits and bad press) and the big risk is in losing policy holders.
The advantage insurance companies have is that we, the policy holders, rarely realize that we are not the primary customer to our doctors. Like a magic trick, there is some distraction and slide of hand going on causing most of us to focus on our doctors and fail to see what our insurance provider is doing to us. We the insurance policy holders are further handicapped by something that resembles a monopoly.
The Health Insurance Monopoly
There are a lot of insurance companies, so we assume that many insurance companies’ means there is no insurance monopoly, but we are wrong. Most insured Americans get their coverage from their employer and most of our employers have a limited number of providers to choose from (from 1 to 4 or 5 maybe.). There may be hundreds of health insurance companies, but if your employer offers coverage from one company then you have only one choice to choose from, and that is my definition of a monopoly.
There was an old joke back in the old days when there was only one Telephone Company. The joke went like this: If you don’t like the phone company take your business somewhere else. Since there was no place else providing phone service we were stuck with whatever they wanted to do or not do regarding phone service. In a similar way, since most of us can’t afford to go out and buy individual health care coverage due to pre-existing conditions or low incomes. While having no insurance coverage at all is a significant problem for 47 million Americans, the insured folk are also having significant problems with health care.
Insured people routinely have their claims denied. Often, if the policy holder appeals the denial they will be paid, but what we may not realize is that thousands of people get denied and go, “Oh, well, I guess we can put it on our MasterCard.” Routine denials of our claims save the Insurance Companies millions of dollars every year. Forcing terminal patients into appeals can benefit the insurance companies because if they drag the proceedings out many of these terminal policy holders will die. Yeah, sometimes the family will sue and once in a while someone wins a big judgment against the insurance company, but what we don’t realize is that this was just part of their business plan. They have done studies and calculated what the cost would be to provide a benefit to all its dying policy holders, and how many of those folks will actually sue, and how many of those suits will be lost? Insurance Companies have lawyers write policy language that is just cryptic enough to allow them to deny coverage for the flimsiest of reason. Then our health insurance companies can (and will and do) deny paying for critically needed procedures knowing that even if they lose a few judgments they will still be able to retain most of their policy holders and the pay-outs for court losses will be less than what they would have paid had they honored and paid for these needed medical procedures.
Why would the insurance industry treat their policy holders in this heartless manner? Because these for-profit insurance companies are businesses and therefore they have no heart, and are therefore, by definition, heartless. Insurance companies are not people. Insurance companies don’t care about policy holders they care about dollars and profit. The insurance industry is not trying to please policy holders they are trying to use us, take our money, pay out as little as possible and when the profits are calculated the greater the profits the happier are the stock holders, their true customers.
If all insurance companies were non-profit companies they would still seek to earn enough money to reinvest in the company to pay salaries, build buildings, and improve their services, but their bottom line would not be profit, it would be providing insurance coverage. A non-profit insurance company would answer to the policy holders not to stock holders.
The President’s advocating for a Public Option is actually advocating for a non-profit alternative whose goal is not profit, but to provide coverage to people who can’t get health coverage any other way.
Article submitted Saturday, August 15, 2009 & read 1212 times.
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